Cochran questions nominee concerning Stanford ponzi scheme

Thad Cochran

Thad Cochran

WASHINGTON, D.C. – U.S. Sen. Thad Cochran (R-Miss.) has asked the acting chair of the agency that denied compensation to Stanford ponzi scheme victims to explain those actions.

Cochran, ranking member on the Senate Agriculture Committee, has submitted questions regarding the Stanford case to Sharon Y. Bowen, the acting chair of the Securities Investor Protection Corporation (SIPC). Bowen, nominated for a seat on the Commodity Futures Trading Commission (CFTC), appeared with two other CFTC nominees at a confirmation hearing last week before the Agriculture Committee.

“The Commodity Futures Trading Commission is an important part of the regulatory framework that protects American farmers, ranchers and businesses, which depend on it to ensure sound markets,” Cochran said. “To that end, I want to know how potential members of the Commission view their role in managing abuses that lead to investor losses or dealing with situations like the Stanford ponzi scheme that harmed investors in Mississippi and many other states.”

In questions submitted to Bowen, Cochran asked the nominee to describe her involvement in the decision by SIPC to deny compensation to the more than 7,000 victims from 46 states, including Mississippi, who lost more than $7.0 billion in the Stanford ponzi scheme.

“Despite the fact that the Securities and Exchange Commission concluded that victims of the alleged ponzi scheme are entitled to receive SIPC coverage for their losses, SIPC declined to cover these losses,” Cochran explained.  “I’m interested in learning how the nominee’s leadership at SIPC and the board’s decision on Stanford will translate to service on the CFTC.”

In 2012, Cochran was among 14 senators who signed a letter encouraging the SEC to appeal the U.S. district court decision, which determined victims of the Stanford fraud cannot be compensated through the SIPC, despite the fact it was specifically established to recoup losses, within certain limits, from bankrupt or financially-troubled brokerages. The SEC appeal is still pending.

Cochran has also cosponsored the Restoring Main Street Investor Protection and Confidence Act of 2013 (S.1725) to reform how SIPC handles investment fraud victims’ compensation cases. The legislation would amend the Securities Investor Protection Act (SIPA) of 1970 to confirm that a customer’s net equity claim is based on the customer’s last statement and that certain recoveries are prohibited, among other things.  It would also allow many individuals to receive greater equity as victims of fraud, economize U.S. securities markets for all classes of investors, and strengthen the oversight and accountability of SIPC. It has been referred to the Senate Committee on Banking, Housing, and Urban Affairs.

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5 Responses to “Cochran questions nominee concerning Stanford ponzi scheme”

  1. Michael Says:

    I applaud Senator Cochran’s leadership on this matter. It is truly mind-boggling that someone could get a presidential nomination to serve as a Commissioner for a financial regulatory agency when they are a defendant to a lawsuit filed by another financial regulatory agency (SEC vs SIPC). Ms. Bowen has a track record for showing her allegiance to Wall Street and not protecting Main Street. So much for investor confidence!

  2. Stanford Victim Says:

    Thank you Senator Cochran for your support. I am one of 7,000 victims of the 6+ Billion Dollar, Stanford Ponzi scheme. He is serving 120 years in prison…. I am now a widow working two jobs to keep my home. My husband invested our retirement in “government approved” IRA CDs and was a few years from retirement. However, once the Stanford scheme was revealed, his cancer returned and he passed away within 2 years. Now I find that the government knew about the scheme and had been investigating this man for over 8 years prior to our investment. Even worse, our money was never invested at all, but was “stolen.” Where did the money go??? … a lavish lifestyle; donations to both political parties and lots of politicians; including trips for politicians to the Island of Antigua on his private jet. All of this was paid for with our “stolen” money. A few political contributions were sent back or donated to some charity instead of the victims, but the many of the contributions were keep.

    The Stanford victims have recovered less than 1% of their investments in the last 5 years. When the Securities Exchange Commission (SEC) ruled that we were entitled to SIPC Insurance to cover our losses, the SIPC board voted to deny our claim; even though Stanford was a dues paying member of SIPC. Now the SEC is suing SIPC to get them to honor our claims, despite SEC having plenary authority over SIPC. The very institution that was formed to “protect” investors has chosen to ignore their responsibility and project the investment firms who pay them for the right to display the SIPC Logo of Trust & Insurance.

    The current acting director of SIPC, Ms. Bowen, has been nominated for a seat on the Commodity Futures Trading Commission, which is supposed to protect the American farmers, ranchers, and businesses. Heaven help them, if she succeeds.

  3. Stanford Kauffman Says:

    Thank you Senator Cochran. Your support of the Stanford Victims has been unwavering. God Bless you.
    The tide is turning and the truth is starting to prevail. Candidates like Sharon Bowen and Mr.Debo P. Adegbile are being known for their true nature. Investor protection hog wash.She never supported the investor rights to have a true and honest vetting on the facts as they became available. As acting Chairman of SIPC she very well could have been on SIMFA’s payroll. She did a great job for them. Giving her a seat on the Commodity Future Board is unwarranted. She has shown to be unable to stand up for the rights of the small guy.

  4. Byron Says:

    We are victims of Stanford. We lost our monies in less than 90 days. We were devastated to learn the government knew of his dealings and did nothing to correct it.
    What was more devastating was to learn that SPIC would not give us our monies back and we thought we were protected. How naïve we all were. The fox was in the hen house and no one let us chickens know.
    We have lost faith in all of our elected officials. That starts from the local officials up to the President. We are now extremely bitter towards banks, brokers, financial planners, politicians and the government.
    We will go to our graves now knowing that this injustice will not be corrected. Our life savings evaporated within 90 days. We scrimped, saved every penny we could to make our retirement years enjoyable. All gone….
    Wish it happens to Ms Bowen. We have never wished any ill will against anyone before this Ponzi scheme, but now, I wish ill will on everybody that had anything to do with this tragedy.
    Shame on all of you and we wish you all burn in Hell.
    No respect given
    Byron

  5. Steven Foster Says:

    Senator Cochran, please remember that the vast majority of victims are not American citizens and they deserve to be treated in the same way as Americans in any resolution.

    Allen Stanford was an American citizen whose activities were supposed to be regulated bu the SEC. All victims regardless of nationality should be treated equally since we al placed our faith in America’s Security and Exchange Committee.

    Join us at the Stanford International Victims group forum to air your views and stay informed on all the latest developments.

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